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Oil price pass-through into inflation in Spain at national and regional level

Ligia Topan (), César Castro (), Miguel Jerez () and Andrés Barge-Gil ()
Additional contact information
Ligia Topan: Universidad Complutense de Madrid
César Castro: Universidad Pública de Navarra

SERIEs: Journal of the Spanish Economic Association, 2020, vol. 11, issue 4, No 6, 583 pages

Abstract: Abstract Oil price showed sharp fluctuations in recent years which revived the interest in its effect on inflation. In this paper, we discuss the relationship between oil price and inflation in Spain, at national and regional levels, and making the distinction between energy and non-energy inflation. To this end, we fit econometric models to measure the effect of oil price shocks on inflation and to predict them under different scenarios. Our results show that almost half of the volatility of changes in total inflation is explained by changes in oil price. As could be expected, the energy component of inflation drives this effect. We also find that, under the most likely scenarios, 1-year ahead total inflation will be moderate, with relevant differences across regions.

Keywords: Inflation; Deflation; Oil price; Forecasting; Simulation (search for similar items in EconPapers)
JEL-codes: E31 E37 Q43 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Oil price pass-through into inflation in Spain at national and regional level (2017) Downloads
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DOI: 10.1007/s13209-020-00222-4

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